The comment was made by Uliana during the bank’s Development Finance Masterclass at the Curtain Members Club in Shoreditch, London.

During her ‘underwriting secrets’ seminar, Uliana imparted her words of knowledge and experience: “[Overage] happens more often than you think and, quite [frequently], affects the deal financially.

“It can literally kill the transaction,” she warned.

“If you see the word ‘overage’ in a development appraisal, you dig right into it, get your head around it, [and] highlight it to the lender because it needs to be dealt with early,” she said.

Overage — or what is commonly referred to as an “anti-embarrassment agreement” — is a “frequent” and “normal” contractual mechanism that allows the seller of land to potentially benefit from any subsequent uplift in value after selling.

“Overage can say anything, that's the beauty of it… and the beast. It can lock you down into anything. So be mindful and read very carefully what triggers your overage,” Uliana warned. She also highlighted the need to know how long the overage is valid for and how it is calculated.

Uliana advised that the way overage is determined can vary; fixed-sum, percentage of profits, and fixed-sum per unit achieved post-planning permission are all on the table.

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“Is it defined correctly? Half the time it’s not, and half the time the vendor’s solicitors will try to purposefully make it unclear to open up excessive payment of overage not in line with what was agreed,” she claimed.

For lenders, overage is a highly important factor to consider, especially with regard to how it is secured — such as registering a restriction on title.

“You may have a condition attached to it which says, ‘Every unit you sell, you must have consent from the vendor’. We will never agree to fund a transaction where we cannot sell completed units and are dependent on a third party to give consent — this is a no go. It's not going to work for anyone ¬— no lender will accept a deal with this restriction.”

A mistake which people also make is thinking that if the overage has already been signed, it cannot be amended. Uliana stated that vendors would be willing to budge on this.

“If this overage prevents the transaction from going ahead and you cannot get development finance with me or elsewhere, this property will not be developed as units will not be sold. This profit will not be materialised and the vendor will not be paid.

“The moment they realise the way this overage is drafted blocks them from proceeding and getting the money, they will agree to vary the sovereignty… But you need good lawyers to deal with this.”